   # Sales-related transactions using perpetual inventory system The following selected transactions were completed by Green Lawn Supplies Co., which sells irrigation supplies primarily to other businesses and occasionally to retail customers: Instructions Journalize the entries to record the transactions of Green Lawn Supplies Co. ### Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

#### Solutions

Chapter
Section ### Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 5, Problem 2PA
Textbook Problem
225 views

## Sales-related transactions using perpetual inventory systemThe following selected transactions were completed by Green Lawn Supplies Co., which sells irrigation supplies primarily to other businesses and occasionally to retail customers: InstructionsJournalize the entries to record the transactions of Green Lawn Supplies Co.

To determine

Sales is an activity of selling the  inventory of a business.

To Record: The sale transactions of the company.

### Explanation of Solution

Record the journal entry for the sale of inventory on account.

 Date Accounts and Explanation Debit ($) Credit ($) March 2 Accounts receivable 18,711 (1) Sales Revenue 18,711 (To record the sale of inventory on account)

Table (1)

Working Note:

Calculate the amount of accounts receivable.

Sales = $18,900 Discount percentage = 1% Amount of accounts receivable} = (SalesDiscount)=Sales(Sales×1%)=$18,900 – ($18,900×1%)=$18,900$189=$18,711 (1)

• Accounts Receivable is an asset and it is increased by $18,711. Therefore, debit accounts receivable with$18,711.
• Sales revenue is revenue and it increases the value of equity by $18,711. Therefore, credit sales revenue with$18,711.

Record the journal entry for cost of goods sold.

 Date Accounts and Explanation Debit ($) Credit ($) March 2 Cost of  Sold 13,300 Inventory 13,300 (To record the cost of goods sold)

Table (2)

• Cost of  sold is an expense account and it decreases the value of equity by $13,300. Therefore, debit cost of sold account with$13,300.
• Inventory is an asset and it is decreased by $13,300. Therefore, credit inventory account with$13,300.

Record the journal entry for the sale of inventory for cash.

 Date Accounts and Explanation Debit ($) Credit ($) March 3 Cash 12,031 (3) Sales Revenue 11,350 Sales Tax Payable 681 (2) (To record the sale of inventory for cash)

Table (3)

Working Notes:

Calculate the amount of sales tax payable.

Sales revenue = $11,350 Sales tax percentage = 6% Sales tax payable = (Sales×Sales tax percentage)=(Sales×6%)($11,350×6%)= $681 (2) Calculate the amount of cash received. Sales revenue =$11,350

Sales tax payable = $681 (2) Cash received = (Sales+Sales tax payable)=$11,350+$681=$12,031

(3)

• Cash is an asset and it is increased by $12,031. Therefore, debit cash account with$12,031.
• Sales revenue is revenue and it increases the value of equity by $11,350. Therefore, credit sales revenue with$11,350.
• Sales tax payable is a liability and it is increased by $681. Therefore, credit sales tax payable account with$681.

Record the journal entry for cost of goods sold.

 Date Accounts and Explanation Debit ($) Credit ($) March 3 Cost of  Sold 7,000 Inventory 7,000 (To record the cost of goods sold)

Table (4)

• Cost of  sold is an expense account and it decreases the value of equity by $7,000. Therefore, debit cost of sold account with$7,000.
• Inventory is an asset and it is decreased by $7,000. Therefore, credit inventory account with$7,000.

Record the journal entry for the sale of inventory on account.

 Date Accounts and Explanation Debit ($) Credit ($) March 4 Accounts receivable 55,400 Sales Revenue 55,400 (To record the sale of inventory on account)

Table (5)

• Accounts Receivable is an asset and it is increased by $55,400. Therefore, debit accounts receivable with$55,400.
• Sales revenue is revenue and it increases the value of equity by $55,400. Therefore, credit sales revenue with$55,400.

Record the journal entry for cost of goods sold.

 Date Accounts and Explanation Debit ($) Credit ($) March 4 Cost of  Sold 33,200 Inventory 33,200 (To record the cost of goods sold)

Table (6)

• Cost of  sold is an expense account and it decreases the value of equity by $33,200. Therefore, debit cost of sold account with$33,200.
• Inventory is an asset and it is decreased by $33,200. Therefore, credit inventory account with$33,200.

Record the journal entry for the sale of inventory for cash.

 Date Accounts and Explanation Debit ($) Credit ($) March 5 Cash 31,800 (5) Sales Revenue 30,000 Sales Tax Payable 1,800 (4) (To record the sale of inventory for cash)

Table (7)

Working Notes:

Calculate the amount of sales tax payable.

Sales revenue = $30,000 Sales tax percentage = 6% Sales tax payable = (Sales×Sales tax percentage)=(Sales×6%)($30,000×6%)= $1,800 (4) Calculate the amount of cash received. Sales revenue =$30,000

Sales tax payable = $1,800 (2) Cash received = (Sales+Sales tax payable)=$30,000+$1,800=$31,800

(5)

• Cash is an asset and it is increased by $31,800. Therefore, debit cash account with$31,800.
• Sales revenue is revenue and it increases the value of equity by $30,000. Therefore, credit sales revenue with$30,000.
• Sales tax payable is a liability and it is increased by $1,800. Therefore, credit sales tax payable account with$1,800.

Record the journal entry for cost of goods sold.

 Date Accounts and Explanation Debit ($) Credit ($) March 5 Cost of  Sold 19,400 Inventory 19,400 (To record the cost of goods sold)

Table (8)

• Cost of  sold is an expense account and it decreases the value of equity by $19,400. Therefore, debit cost of sold account with$19,400.
• Inventory is an asset and it is decreased by $19,400. Therefore, credit inventory account with$19,400.

Record the journal entry for the cash receipt against accounts receivable.

 Date Accounts and Explanation Debit ($) Credit ($) March 12 Cash 18,711 Accounts Receivable 18,711 (To record the receipt of cash against accounts receivables)

Table (9)

• Cash is an asset and it is increased by $18,711. Therefore, debit cash account with$18,711.
• Accounts Receivable is an asset and it is increased by $18,711. Therefore, debit accounts receivable with$18,711.

Record the journal entry for the sale of inventory for cash.

 Date Accounts and Explanation Debit ($) Credit ($) March 14 Cash 13,700 Sales Revenue 13,700 (To record the sale of inventory for cash)

Table (10)

• Cash is an asset and it is increased by $13,700. Therefore, debit cash account with$13,700.
• Sales revenue is revenue and it increases the value of equity by $13,700. Therefore, credit sales revenue with$13,700.

Record the journal entry for cost of goods sold.

 Date Accounts and Explanation Debit ($) Credit ($) March 14 Cost of  Sold 8,350 Inventory 8,350 (To record the cost of goods sold)

Table (11)

• Cost of  sold is an expense account and it decreases the value of equity by $8,350. Therefore, debit cost of sold account with$8,350.
• Inventory is an asset and it is decreased by $8,350. Therefore, credit inventory account with$8,350.

Record the journal entry for the sale of inventory on account.

 Date Accounts and Explanation Debit ($) Credit ($) March 16 Accounts receivable 27,225 (6) Sales Revenue 27,225 (To record the sale of inventory on account)

Table (12)

Working Note:

Calculate the amount of accounts receivable.

Sales = $27,500 Discount percentage = 1% Amount of accounts receivable} = (SalesDiscount)=Sales(Sales×1%)=$27,500 – ($27,500×1%)=$27,500$275=$27,225 (6)

• Accounts Receivable is an asset and it is increased by \$27,225

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